Approximately 1/6th of the population gets Social Security. Last year's COLA of 2.3% isn't going to be doing much for them at this point. The average retiree gets more than half their retirement income from Social Security, and CPI is usually used to adjust other retirement benefits (if they adjust at all).

Farming is fuel-intensive in most areas. The move to ethanol is likely making the overall energy situation worse instead of better, but it is producing a relative boom in grain-farming states. The split between the 7.7% annualized rate for the last quarter for all items and the 3.1% annualized rate for ex-food and energy is a sign that discretionary spending is truly constrained and limiting inflation. However, the corollary is that profits in businesses related to most consumer discretionary spending will continue to go down. This includes utilities such as phone service. For example, AT&T and Verizon are duelling with flat-rate calling plans.

Another sign that consumers are really being hammered is that the 12-month rate for food is higher than the 3-month rate for food (4.6% vs 5.0%). The higher diesel costs (started moving up in the fall) should be pushing up food prices much faster, but instead end consumer prices are being relatively cut a bit in a war to maintain volume. This will not last.

When looking at the reported retail sales figures for the Nov/Dec/Jan period, it is clear that inflation-adjusted sales are dropping, which accounts for the fact that the true rise in costs is not moving into CPI yet. Almost everyone in the consumer supply chain is taking a hit to maintain volume.

The type of inflation we are seeing is probably not very susceptible to monetary policy. Opening up new internal sources of energy would help a great deal.

The strong implication is that resourcing to internal sources is likely to occur wherever possible. A weaker dollar and relatively global energy/grain demand, plus these statistics, seem to almost guarantee that insourcing will grow. This can occur in anything from oranges to oil.

So the first petard is the US' poor energy policy. Recently I pointed out that gas consumption seems to be dropping, so it seems that in fact the population is conserving. However we haven't built energy plants like nuclear power, etc, which could help our overall situation. When you burn grains for fuel, you do push up the cost of animal and grain foods. The type of inflation that the US is seeing is highly regressive. It hurts the lower income earners far worse than the higher income earners, and it is difficult to avoid. this type of inflation. Indeed, in some cases the higher income earners who can buy new vehicles, etc, got a big bonus last year as prices for durables generally dropped.

And this phenomenon brings me to politics. I have been reading the Clinton campaign's explanations as to their continuing drop in the polls with great interest. They are very far from connecting with reality. I read at least one Democratic forum pretty regularly, and the Clinton campaign was badly hurt by the idea of mandating the purchase of health insurance, and either preventing employment for the uninsured or garnishing wages. Real median household income in the US has not risen overall for years now:The decline in construction certainly impacted incomes last year as well, and in a negative direction. The decline in WIET receipts reported in the last few months strongly supports the idea that real median household incomes aren't rising now. Additionally, many individuals are involved in contracting, construction, manufacturing etc, which are fluctuating at best.

Imagine yourself as a worker who has experienced several different periods of prolonged layoffs in the last 15 years. You are not wowed by the prospect of someone telling you that you must purchase health insurance when you have experienced periods in which you had difficulty keeping the lights on and food on the table. A plan that subsidizes a part of health insurance for you sounds good, but at any given time it is not clear that you will have the money to pay the monthly subsidized fee. Your prior year income may have been excellent, and this year's income may be much lower. Hillary really hurt herself with this proposal. Massachusetts tried it, and it hasn't succeeded there either, although they are just taxing people who don't have health insurance.

As far as the male vote goes, Hillary's health care proposals alone must be a substantial worry. There are a very large number of men paying child support in this country. They are subject to being jailed if they don't pay, and many of them could not make their child support payments and buy insurance for themselves.

The second problem Hillary's campaign is suffering is the tendency of Hillary supporters to scream about sexism whenever things turn down. I strongly believe that Obama's relative strength among men in Wisconsin was assisted by the wails about sexism. I do not believe that most males are indeed sexist, but they are certainly going to be deeply turned off by being accused of it. Hillary's campaign was deeply damaged after the debate in which her secret plan to fix Social Security and her confusion on the question of licenses for illegal immigrants were questioned. Her supporters responded with wrath and the meme that the men had "ganged up" on her. It was not a Maggie Thatcher like performance. The somewhat acerbic negativity toward Obama did not help. Nor did the failure to congratulate him. The picture which is building up in many voters' minds is of a women who is very unwilling to be questioned and may be angry when questioned.

I believe that the Clinton campaign is fundamentally out of touch with the economic realities facing a lot of their target voters. Those voters want jobs. They would love help with health insurance, but are very doubtful that the government will get it right the first time. What they really need are jobs - good paying jobs.

Here's a dose of economic reality. MSN just published one of its helpful career oriented articles about the best states for employment. They listed the 15 states with the lowest unemployment rates, plus some other details:

The wages cited are mean, not median. I added the Median household incomes for each state. It is not a good sign that government is the top industry in 33% (five) of these states. As for trade and transportation, truckers, especially independents, are taking a bad hit to income.

2006 was about the top in some of these states. Because construction incomes were relatively high, the decline in construction is cutting into both jobs and incomes. Since half of all households will have incomes below the median income shown, it's a pretty good guess that about 30% of all households don't have a flaming chance in hell of maintaing coverage unless there is a very substantial subsidy. Massachusetts is already cutting provider reimbursements and those insured under the subsidized plan may be facing major premium increases. The state is facing some major financial difficulties due to much higher than expected costs. They are now appealing to the federal government to pick up more of the cost.

The maximum out of pocket expense for a single person in Massachusetts was set at $5,000. The coverage standards can be found here and include mental health coverage plus prescription drug coverage. The affordability standards are here. A couple making between 40-50K can be required to pay no more than $270 premium per month. Needless to say, it is very difficult to provide this type of insurance for a couple in their 50s for this type of premium, so the result has been that many more individuals are shifting to the subsidized plans.

** Correction helpfully sent in by JWalker who noticed I had labelled it CPI-U.

Pretty much every problem we have could be solved with improved income. If I make enough, I can fund my own health care, retirement, pay back debt and afford a more fuel efficient car. Companies shot themselves in the foot by outsourcing jobs to keep down wages. I'm still waiting for them to outsource those CEO jobs too.

Anon - yes, it would be the total household income. If you look at the link I inserted for state household median incomes, you can see how they have a total and then per worker numbers for each state.

So yes, these numbers are not good overall. In general the earnings of males have declined for the lower-middle/working class although the wages of women have risen.

This is the reason for the hassle about illegal immigrants. They are being used to drive wages down for this group and below. A lot of working class jobs make LESS IN NOMINAL dollars than they did in the 80s. Especially construction.

Teri - exactly. The declining real incomes are the problem. It's true that a lot of Americans live much more wastefully than their parents, but even if they don't, they are still sliding backwards. I think that is the real reason for the credit bulge. In retrospect, it appears that the 1983 SS/Medicare "fix" was a complete (and totally bipartisan) disaster. It decapitalized the working and lower middle class families, short-circuited private savings for a large group of Americans, and funded an over expansion of the federal government, because the excess proceeds were used like an income tax.

MAB - with a bulge of retirees coming up we are doomed to see entitlement programs grow. There is no way we can afford to add substantial new ones. In short, I think neither Hillary's nor Obama's health care proposals have a chance. If MA can't make it work, just try in the Dakotas!

If we constrained illegal immigration, we'd produce a rise in incomes that would help somewhat. A huge number of the uninsured are concentrated among recent illegal immigrants - a fact which is notably absent from the political discussion.

But regardless, we are going to be paying higher income taxes, and the average above-median household is going to have to pay higher taxes. You cannot shift all the burden on the top 10% without producing real economic problems. So much money has to be raised as a percent of GDP that it is completely impossible not to spread the burden.

Stagflation. This economy is a mess. There's fat to cut without hurting citizens. ( lunacy thinking on the left or the lunacy on the right)

Get rid of the illegals = Save one state like CA $10B /yr. Besides, increasing amt. of jobs for citizens.

Get all non-citizens of use of govt. benefits and save another pile of money.Send the third world refugees back to a cheaper place. We don't have the jobs. And, they don't have the skills. There's another categ., we need to cut off.Many aren't aware of: there are several hundred thousands of old folks who were allowed in here and paid zero into Soc. Sec. U.S. Govt. gives them handouts and medical free! Say their families should pay for them! Most of them live with their families or live in nice new senior places again subsidized by us!

Yes, Hillary's approach has hurt her.And, Obama is a farce in our view.

I found your blog thru Conservative Belle. This post caught my eye because I think people are beginning to see what deep economic problems we have in this country.

What does scare me about Obama and Hillary and John McCain is that they don't seem to understand that THEY are the problem with our economy.

Too much government spending, too much government regulation, and too much micromanagement. It really irks me that even our presumptive GOP candidate has proven himself to have about as much knowledge of how an economy works as Hillary does.

Anyway, what I would love to see is everyone starting to blame the government for our problems and forcing it to shrink as opposed to looking to them for "solutions". But with the momentum that Obama has right now, I don't think it's going to happen.

Logically, if the government is the problem we do need politicians to fix things - bad government measures. And there are things only the government can do. National defense, regulation to keep markets honest and transparent - that sort of thing.

It seems as if the government has gotten interested in trying to do all the things it can't at the expense of doing all the things it can and must.